Articles Posted in Life Insurance

Life insurance claims denial attorneys will rarely see this situation, but it is worth knowing about.  This is a 1987, Texas Supreme Court opinion styled, Davidson v. Great National Life Insurance Company.

Davidson is the beneficiary of life insurance policy insuring Dauod Alquassab.  Davidson filed suit after Great National denied the claim for benefits.  The trial trial found in favor of Davidson.  An appeal resulted in the verdict being reversed.  This Texas Supreme Court reversed the appeals court and remanded the case for further consideration.

In May 1980, a man identifying himself as Dauod Alquassab applied for an insurance policy on his life from Great National.  Although unknown to Great National at the time of the application, Alquassab had previously used the names of David Kassab and David Kay; he was convicted of felony fraud charges under each previous name.  Alquassab named Ilan Eiger, his partner in a real estate business, as the beneficiary when Great National issued the policy in June 1980.  In September 1980, Alquassab changed the beneficiary designation from Eiger to Phyllis Davidson, his former wife from whom he was divorced in 1968.  Alquassab then traveled to Tel Aviv, Israel, in February 1981.  Prior to his departure, the record indicates that Alquassab allegedly defrauded First City Bank in Houston, of approximately $1.5 million dollars, and committed additional acts of fraud upon other banking institutions.

Here is an opinion from the United States Fifth Circuit that deals with life insurance.  The opinion is styled, Mirna Guzman v. Allstate Assurance Company.

This is an appeal from the District Court wherein the District Court granted summary judgment in favor of Allstate.  This is a review of how the Court reviews the granting of a summary judgment.

Here is some basic background in the case:

Life insurance through an employer is common.  Most people do not realize the differences between regular life insurance that is purchased from a local agent or through a mail solicitation and life insurance that is purchased through their employer.  The major difference is that life insurance purchased through their employer is often governed by the Employee Income Security Act of 1974 (ERISA), which is a life insurance plan governed by federal rules versus state rules otherwise.

Here is a case that is worth reading for anybody dealing with ERISA.  It is a 2021, opinion from the 5th Circuit Court of Appeals.  It is styled, Erica Talasek v. National Oilwell Varco, L.P.

Ben Talasek had purchased life insurance through his employer.  He died and a claim was made by Erica for benefits.  The actual facts of the case and the procedural history can be read in the opinion.

Life insurance claim denial cases are usually based on the insurance company’s assertion that the insured made misrepresentations in the life insurance application.  A 2021, opinion from the United States 5th Circuit needs to be read when handling these types of cases.  The opinion is styled, Mirna Guzman v. Allstate Assurance Company.

In this case, Saul Guzman died after suffering a seizure.  He was 28 years old.  Mirna, Sauls wife and the beneficiary of the policy made a claim for policy proceeds.  Allstate rescinded the policy and refused to pay and a lawsuit resulted.  Allstate filed a motion for summary judgment and the District Court granted the motion in favor of Allstate.  This Court reversed that ruling.

In the life insurance application process, Saul answered a question in the negative about using tobacco or nicotine.  Evidence appears to show the answer should have been yes.

Many times, for a life insurance lawyer, the question is, When did the life insurance coverage take effect.

This question was partially answered in a 1980 opinion from the Eastland Court of Appeals.  The opinion is styled, Durham Life Ins. Co. v. Cole.

Kim Cole, a widow, individually and as next friend for her two minor children, sued Durham claiming benefits under a group life insurance policy written by Durham.  A trial resulted in a judgment against Durham for $10,000 together with penalty of $1,200 and attorney fees of $5,000.  Durham appealed and this Court ruled in favor of Durham.

Life Insurance Lawyers have many potential clients where in the basis for denial of the claim is that insured made a misrepresentation in the policy application within two years of making the application.  This two years is called the contestability period.  After two years the policy is supposed to be incontestible.  The Southern District of Texas, Houston Division, issued an opinion in September 2021, wherein one of the issues dealt with the incontestability period.  The style of the opinion is, Pruco Life Insurance Company v. Blanca Monica Villarreal and Transamerica LIfe Insurance Company v. Blanca Monica Villarreal.

In this case, the insured had purchased two very large life insurance policies from the Pruco and Transamerica.  The details of the case can be read in the opinion as can the other issues presented.  Discussed here is the issue of Incontestability.

Villarreal moved for partial summary judgment on this issue that the policies are incontestable on that basis that under Texas law, insurance policies cannot be contested after remaining in effect for two years during the insured’s life.  Villarreal argues that even if Texas law permits insurers to raise a material and intentional misrepresentation defense after the two years, that challenge would not apply here because the life insurance policies did not contain the language reserving the right to raise the challenge.  Additionally, Villarreal argues that the defense would apply only if the insured (Rosendi) was residing in Texas “during the term of his life insurance policies.”  The insurers oppose on the basis that an exception to incontestability exists when an insurer can prove material and intentional misrepresentations and that the exception applies to Rosendi’s life insurance policies because he was “in” Texas when he contracted for the policies
and when the policies were delivered to him.

Here is a life insurance case wherein the insurance company attempts to have the Court agree to rescission of the policy.  It is a 2021, opinion from the Southern District of Texas, Houston Division.  The opinion is styled, Pruco Insurance Company v. Blanca Monica Villarreal – Transamerica Life Insurance Company v. Blanca Monica Villarreal.

This opinion regards both sides filing motion for summary judgement.  The case involves millions of dollars of life insurance.  The facts of the case are long and detailed and the opinion should be read to understand the facts.  The case also deals with many issues.  The issue discussed here has to do with rescission.

The insurer claim there are undisputed facts that show material, intentional misrepresentations made in the application for insurance, warranting rescission as a matter of law.  A material fact is one that might affect the outcome of the suit
under governing law,” and “a fact issue is genuine if the evidence is such that a reasonable jury could return a verdict for the non-moving party.

Life Insurance Claim Denials are getting more and more common.  But, the insurance companies are beginning to jump ahead of the denials and starting to rescind the policies based on their assertion that there were/are misrepresentations in the insurance application.

Statutory Requirements – In addition to common law standards, several statutory provisions regulate an insurer’s ability to avoid coverage based on a misrepresentation by the insured.  These are found in the Texas Insurance Code, Chapter 705.

The statutes provide:

Life Insurance Lawyers who handle claims denied due to the claim that a misrepresentation was made in the life insurance application must read this 2021, opinion from the Amarillo Court of Appeals.  It is styled, Bertha Arce, Individually And As Representative Of All Others Similarly Situated v. American National Insurance Company.

The deceased insured, Sergio Arce, Jr. took out a policy of life insurance with American.  Within days, Sergio was killed in a car accident and a claim for benefits was made by Bertha Arce (Arce).  American denied the claim based on the assertion that Sergio misrepresented his health condition in the application for the life insurance.

American filed a motion for summary judgment in the trial court which was granted and this appeal followed.

Life insurance claims can take many turns, as any attorney who handles very many of these life insurance claims can tell you.  Here is a 2021, opinion from the Southern District of Texas, Houston Division.  It is styled, New York Life Insurance Company v. Srinivas Varati.

New York has filed a Rule 12(b)(6) motion to dismiss and a motion for judgment on the pleadings.  The Court granted the motions.

Here is some background.  Varati is the administrator for the estate of Shanti Nakirekanti.  Shanti died on February 18, 2019, the same day as her late spouse, Sreenivas Nakirekanti (Sreenivas).  Sreenivas died by suicide.  On March 30, 2017, New York had issued a term life policy to Sreenivas.  The policy had a face value of $500,000 and listed Sreevinas as the sole “owner.”  The policy, and Sreenivas’s application for the policy, listed Sreenivas’s children Pranay and Nitya, each as 50% beneficiary.  Section 3.4 of the Policy’s base provisions (the Base Policy) defines “Beneficiary” as “the person or entity named in the application, or in a notice you sign that gives us [the Company] the information we need[.]”